Abstract

The market decline of the late 1980’s resulted in a number of multinational companies retreating from the local oil production scene on the island of Trinidad and Tobago. As such, the state-owned Oil Company at the time was left with over 5000 inactive wells and a large amount of idle equipment such as well servicing rigs, trucks and pumps. The Government of Trinidad and Tobago in a bid to rejuvenate the declining industry issued the mandate that small land based fields which were uneconomical to be produced from should be leased and farmed out to smaller independent local operators in a bid to augment production-a policy that has remained true until the present.

This study reviews the main elements and differences of the Farmout and Lease operatorship as well as highlights the successes and provides suggestions for future roles. The major difference between the LO/FO operations is that with the lease operations, only the well is leased out and the operator has limited rights for the development of petroleum resources in the block. Production is generally confined to the formation across which the well was initially perforated. As a result, there is no drilling obligation. With the Farmout operatorship the operator has unlimited rights to petroleum development in the block at any depth and also is required to drill new wells to develop these resources. This in turn affects the Capital Expenditure (CAPEX) as the type and diversity of expertise required for the operatorship varies for each. During the period 1991 to 1999 the Leaseout program was responsible for the reactivation of 25 dormant blocks. In the same period the Farmout program was responsible for increased activity from 121 wells; 85 of which were newly drilled.

The Leaseout program has shown over 24 MMBBLS of oil recovered to date with the average production for the year 2010 being 4870 bopd. This represents 5.4% of the country’s average daily production. The Farmout program has shown 8MMBBLS of oil recovered to date with an average rate of 1650 bopd in 2010 (1.8% contributions). Developments in these programs include the legal modification of contracts in the form of the IPSC (Incremental Production Sharing Contracts) introduced in 2010.

The future of the programs hold potential for expansion of operations into marine-area and small scale steam flooding and CO2 injection targeting smaller pockets of hydrocarbons on-land and stranded gas offshore. But there will be the need for technical skills to be acquired and passed on if such ventures are to be undertaken successfully and economically.

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